Correlation Between Lion Chemtech and TJ Media
Can any of the company-specific risk be diversified away by investing in both Lion Chemtech and TJ Media at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Lion Chemtech and TJ Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion Chemtech Co and TJ media Co, you can compare the effects of market volatilities on Lion Chemtech and TJ Media and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Lion Chemtech with a short position of TJ Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Chemtech and TJ Media.
Diversification Opportunities for Lion Chemtech and TJ Media
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lion and 032540 is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Lion Chemtech Co and TJ media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TJ media and Lion Chemtech is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Lion Chemtech Co are associated (or correlated) with TJ Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TJ media has no effect on the direction of Lion Chemtech i.e., Lion Chemtech and TJ Media go up and down completely randomly.
Pair Corralation between Lion Chemtech and TJ Media
Assuming the 90 days trading horizon Lion Chemtech Co is expected to generate 2.76 times more return on investment than TJ Media. However, Lion Chemtech is 2.76 times more volatile than TJ media Co. It trades about 0.18 of its potential returns per unit of risk. TJ media Co is currently generating about -0.13 per unit of risk. If you would invest 235,500 in Lion Chemtech Co on September 25, 2024 and sell it today you would earn a total of 68,500 from holding Lion Chemtech Co or generate 29.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Lion Chemtech Co vs. TJ media Co
Performance |
Timeline |
Lion Chemtech |
TJ media |
Lion Chemtech and TJ Media Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lion Chemtech and TJ Media
The main advantage of trading using opposite Lion Chemtech and TJ Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Chemtech position performs unexpectedly, TJ Media can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in TJ Media will offset losses from the drop in TJ Media's long position.The idea behind Lion Chemtech Co and TJ media Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.TJ Media vs. Lion Chemtech Co | TJ Media vs. Samhyun Steel Co | TJ Media vs. KMH Hitech Co | TJ Media vs. Hankuk Steel Wire |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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